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Item 1. Financial Statements

2023-07-26 compared with 2023-04-27 · 168 added, 89 removed, 391 unchanged (40% of the section changed)

3 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2023 2022 2023 2022

(Thousands, except per share amounts)

10 unchanged sentences

Depreciation and depletion 395,684 429,143 783,369 851,241

Loss (gain) on sale/exchange of long-lived assets 16,528 ( 1,209 )

(Gain) loss on sale/exchange of long-lived assets ( 225 ) ( 981 ) 16,303 ( 2,190 )

Impairment of contract asset — — — 184,945

2 unchanged sentences

Total operating expenses 1,053,744 1,165,607 2,103,935 2,474,763

Operating income (loss) 1,610,880 ( 1,888,266 )

Operating (loss) income ( 34,993 ) 1,361,901 1,575,887 ( 526,365 )

(Income) loss from investments ( 1,092 ) ( 3,577 ) ( 5,856 ) 17,208

Dividend and other income ( 562 ) ( 7,313 ) ( 737 ) ( 10,909 )

(Gain) loss on debt extinguishment ( 6,606 ) 6,923

Loss (gain) on debt extinguishment 5,462 104,348 ( 1,144 ) 111,271

Interest expense, net 39,883 65,985 86,429 133,887

Income (loss) before income taxes 1,575,879 ( 1,980,280 )

Income tax expense (benefit) 356,646 ( 465,697 )

Net income (loss) 1,219,233 ( 1,514,583 )

Net income attributable to noncontrolling interests 685 1,465

Net income (loss) attributable to EQT Corporation $ 1,218,548 $ ( 1,516,048 )

Income (loss) per share of common stock attributable to EQT Corporation:

(Loss) income before income taxes ( 78,684 ) 1,202,458 1,497,195 ( 777,822 )

Income tax (benefit) expense ( 11,818 ) 308,234 344,828 ( 157,463 )

Net (loss) income ( 66,866 ) 894,224 1,152,367 ( 620,359 )

Net (loss) income attributable to noncontrolling interests ( 240 ) 2,863 445 4,328

Net (loss) income attributable to EQT Corporation $ ( 66,626 ) $ 891,361 $ 1,151,922 $ ( 624,687 )

(Loss) income per share of common stock attributable to EQT Corporation:

Weighted average common stock outstanding 361,982 369,866 361,721 372,023

Net income (loss) attributable to EQT Corporation $ 3.37 $ ( 4.05 )

Net (loss) income attributable to EQT Corporation $ ( 0.18 ) $ 2.41 $ 3.18 $ ( 1.68 )

Diluted (Note 7):

Weighted average common stock outstanding 361,982 407,303 393,435 372,023

Net income (loss) attributable to EQT Corporation $ 3.10 $ ( 4.05 )

Net (loss) income attributable to EQT Corporation $ ( 0.18 ) $ 2.19 $ 2.94 $ ( 1.68 )

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

EQT CORPORATION AND SUBSIDIARIES

STATEMENTS OF CONDENSED CONSOLIDATED COMPREHENSIVE INCOME (LOSS) (UNAUDITED)

STATEMENTS OF CONDENSED CONSOLIDATED COMPREHENSIVE (LOSS) INCOME (UNAUDITED)

Three Months Ended

Net income (loss) $ 1,219,233 $ ( 1,514,583 )

June 30, Six Months Ended

2023 2022 2023 2022

Net (loss) income $ ( 66,866 ) $ 894,224 $ 1,152,367 $ ( 620,359 )

Other comprehensive income, net of tax:

1 unchanged sentence

$ 14 , $ 21 , $ 29 and $ 41

Comprehensive income (loss) 1,219,397 ( 1,514,520 )

Comprehensive income attributable to noncontrolling interests 685 1,465

Comprehensive income (loss) attributable to EQT Corporation $ 1,218,712 $ ( 1,515,985 )

49 64 213 127

Comprehensive (loss) income ( 66,817 ) 894,288 1,152,580 ( 620,232 )

Comprehensive (loss) income attributable to noncontrolling interests ( 240 ) 2,863 445 4,328

Comprehensive (loss) income attributable to EQT Corporation $ ( 66,577 ) $ 891,425 $ 1,152,135 $ ( 624,560 )

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

1 unchanged sentence

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

Current assets:

37 unchanged sentences

STATEMENTS OF CONDENSED CONSOLIDATED CASH FLOWS (UNAUDITED)

Three Months Ended March 31,

Six Months Ended June 30,

Cash flows from operating activities:

3 unchanged sentences

Depreciation and depletion 783,369 851,241

Impairments of long-lived assets and loss (gain) on sale/exchange of long-lived assets 27,074 213,727

Impairment of long-lived assets and loss/gain on sale/exchange of long-lived assets 32,174 259,794

(Income) loss from investments ( 5,856 ) 17,208

14 unchanged sentences

Capital expenditures ( 981,795 ) ( 684,972 )

Proceeds from sale of investment shares — 189,249

Other investing activities ( 2,036 ) ( 11,962 )

3 unchanged sentences

Repayment of credit facility borrowings — ( 6,137,000 )

Debt issuance costs ( 3,557 ) ( 9,154 )

Repayment and retirement of debt ( 1,012,877 ) ( 576,640 )

12 unchanged sentences

STATEMENTS OF CONDENSED CONSOLIDATED EQUITY (UNAUDITED)

Shares No Par Value Treasury Stock (Accumulated Deficit) Retained Earnings Accumulated Other

Shares No Par Value Treasury Stock (Accumulated Deficit)

Retained Earnings Accumulated Other

Comprehensive Loss (a) Noncontrolling Interest in

1 unchanged sentence

(Thousands, except per share amounts)

Balance at April 1, 2022 369,074 $ 9,921,348 $ ( 2,848 ) $ ( 1,725,279 ) $ ( 4,548 ) $ 17,360 $ 8,206,033

Comprehensive income, net of tax:

Net income 891,361 2,863 894,224

Other postretirement benefits liability adjustment, net of tax expense:

Dividends ($ 0.125 per share)

( 46,209 ) ( 46,209 )

Share-based compensation plans 645 27,268 27,268

Convertible Notes settlements 1 30 30

Distribution to noncontrolling interest ( 2,553 ) ( 2,553 )

Other 11,233 11,233

Balance at June 30, 2022 369,720 $ 9,948,646 $ ( 2,848 ) $ ( 880,127 ) $ ( 4,484 ) $ 28,903 $ 9,090,090

Balance at April 1, 2023 361,586 $ 9,776,392 $ — $ 2,338,572 $ ( 2,830 ) $ 41,454 $ 12,153,588

Comprehensive loss, net of tax:

Net loss ( 66,626 ) ( 240 ) ( 66,866 )

Other postretirement benefits liability adjustment, net of tax expense:

Dividends ($ 0.15 per share)

( 54,248 ) ( 54,248 )

Share-based compensation plans 64 14,451 14,451

Convertible Notes settlements 4 12 12

Distribution to noncontrolling interest ( 1,958 ) ( 1,958 )

Balance at June 30, 2023 361,654 $ 9,790,855 $ — $ 2,217,698 $ ( 2,781 ) $ 39,256 $ 12,045,028

Common shares authorized:

Preferred shares authorized:

There were no preferred shares issued or outstanding.

(a) Amounts included in accumulated other comprehensive loss are related to other postretirement benefits liability adjustments, net of tax, which are attributable to net actuarial losses and net prior service costs.

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

EQT CORPORATION AND SUBSIDIARIES

STATEMENTS OF CONDENSED CONSOLIDATED EQUITY (UNAUDITED)

Shares No Par Value Treasury Stock (Accumulated Deficit)

Retained Earnings Accumulated Other

Comprehensive Loss (a) Noncontrolling Interest in

Consolidated Subsidiaries Total Equity

(Thousands, except per share amounts)

Balance at January 1, 2022 376,399 $ 10,071,820 $ ( 18,046 ) $ ( 94,400 ) $ ( 4,611 ) $ 16,236 $ 9,970,999

8 unchanged sentences

Distribution to noncontrolling interest ( 2,894 ) ( 2,894 )

Balance at March 31, 2022 369,074 $ 9,921,348 $ ( 2,848 ) $ ( 1,725,279 ) $ ( 4,548 ) $ 17,360 $ 8,206,033

Other 11,233 11,233

Balance at June 30, 2022 369,720 $ 9,948,646 $ ( 2,848 ) $ ( 880,127 ) $ ( 4,484 ) $ 28,903 $ 9,090,090

Balance at January 1, 2023 365,363 $ 9,891,890 $ — $ 1,283,578 $ ( 2,994 ) $ 40,854 $ 11,213,328

9 unchanged sentences

Contribution from noncontrolling interest 3,750 3,750

Balance at March 31, 2023 361,586 $ 9,776,392 $ — $ 2,338,572 $ ( 2,830 ) $ 41,454 $ 12,153,588

Balance at June 30, 2023 361,654 $ 9,790,855 $ — $ 2,217,698 $ ( 2,781 ) $ 39,256 $ 12,045,028

Common shares authorized:

8 unchanged sentences

Accordingly, they do not include all information and notes required by GAAP for complete financial statements.

In the opinion of management, these statements include all adjustments (consisting of only normal recurring accruals, unless otherwise disclosed in this Quarterly Report on Form 10-Q) necessary for a fair presentation of the financial position of EQT Corporation and subsidiaries as of March 31, 2023 and December 31, 2022, the results of its operations, its equity and its cash flows for the three month periods ended March 31, 2023 and 2022.

In the opinion of management, these statements include all adjustments (consisting of only normal recurring accruals, unless otherwise disclosed in this Quarterly Report on Form 10-Q) necessary for a fair presentation of the financial position of EQT Corporation and subsidiaries as of June 30, 2023 and December 31, 2022, the results of its operations and equity for the three and six month periods ended June 30, 2023 and 2022 and its cash flows for the six month periods ended June 30, 2023 and 2022.

Certain previously reported amounts have been reclassified to conform to the current year presentation.

4 unchanged sentences

The following table summarizes net cash paid for interest and income taxes and non-cash activity included in the Statements of Condensed Consolidated Cash Flows.

Three Months Ended March 31,

Six Months Ended June 30,

Cash paid during the period for:

4 unchanged sentences

Capitalization of non-cash equity share-based compensation 2,997 2,550

Issuance of common stock for Convertible Notes settlement (Note 6) 70 8

Increase in right-of-use assets and lease liabilities, net 507 819

Issuance of common stock for Convertible Notes settlement 82 38

Revenue from Contracts with Customers

9 unchanged sentences

When selling natural gas, NGLs and oil on behalf of royalty or working interest owners, the Company acts as an agent and, thus, reports the revenue on a net basis.

EQT CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

$ 448.2 million and $ 1,171.9 million in accounts receivable in the Condensed Consolidated Balance Sheets as of March 31, 2023 and December 31, 2022, respectively.

For contracts with customers where the Company's performance obligations had been satisfied and an unconditional right to consideration existed as of the balance sheet date, the Company recorded amounts due from contracts with customers of $ 376.9 million and $ 1,171.9 million in accounts receivable in the Condensed Consolidated Balance Sheets as of June 30, 2023 and December 31, 2022, respectively.

The table below provides disaggregated information on the Company's revenues.

3 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2023 2022 2023 2022

Revenues from contracts with customers:

7 unchanged sentences

Total operating revenues $ 1,018,751 $ 2,527,508 $ 3,679,822 $ 1,948,398

The following table summarizes the transaction price allocated to the Company's remaining performance obligations on all contracts with fixed consideration as of March 31, 2023.

Amounts shown exclude contracts that qualified for the exception to the relative standalone selling price method as of March 31, 2023.

The following table summarizes the transaction price allocated to the Company's remaining performance obligations on all contracts with fixed consideration as of June 30, 2023.

Amounts shown exclude contracts that qualified for the exception to the relative standalone selling price method as of June 30, 2023.

2023 (a) 2024 Total

Natural gas sales $ 6,548 $ 469 $ 7,017

(a) April 1 through December 31.

(a) July 1 through December 31.

Derivative Instruments

19 unchanged sentences

Settlements of derivative commodity instruments are reported as a component of cash flows from operating activities in the Statements of Condensed Consolidated Cash Flows.

With respect to the derivative commodity instruments held by the Company, the Company hedged portions of its expected sales of production and portions of its basis exposure covering approximately 1,556 billion cubic feet (Bcf) of natural gas and 2,079 thousand barrels (Mbbl) of NGLs as of March 31, 2023 and 1,424 Bcf of natural gas and 1,483 Mbbl of NGLs as of December 31, 2022.

The open positions at both March 31, 2023 and December 31, 2022 had maturities extending through December 2027.

With respect to the derivative commodity instruments held by the Company, the Company hedged portions of its expected sales of production and portions of its basis exposure covering approximately 1,711 billion cubic feet (Bcf) of natural gas and 1,545 thousand barrels (Mbbl) of NGLs as of June 30, 2023 and 1,424 Bcf of natural gas and 1,483 Mbbl of NGLs as of December 31, 2022.

The open positions at both June 30, 2023 and December 31, 2022 had maturities extending through December 2027.

Certain of the Company's OTC derivative instrument contracts provide that, if the Company's credit rating assigned by Moody's Investors Service, Inc.

5 unchanged sentences

Anything below these ratings is considered non-investment grade.

As of March 31, 2023, the Company's senior notes were rated "Ba1" by Moody's, "BBB–" by S&P and "BBB–" by Fitch.

As of June 30, 2023, the Company's senior notes were rated "Ba1" by Moody's, "BBB–" by S&P and "BBB–" by Fitch.

When the net fair value of any of the Company's OTC derivative instrument contracts represents a liability to the Company that is in excess of the agreed-upon dollar threshold for the Company's then-applicable credit rating, the counterparty has the right to require the Company to remit funds as a margin deposit in an amount equal to the portion of the derivative liability that is in excess of the dollar threshold amount.

The Company records these deposits as a current asset in the Condensed Consolidated Balance Sheets.

As of March 31, 2023 and December 31, 2022, the aggregate fair value of all OTC derivative instruments with credit rating risk-related contingent features that were in a net liability position was $ 90.8 million and $ 347.6 million, respectively, for which the Company deposited and recorded current assets of zero for both periods.

As of June 30, 2023 and December 31, 2022, the aggregate fair value of all OTC derivative instruments with credit rating risk-related contingent features that were in a net liability position was $ 30.3 million and $ 347.6 million, respectively, for which no deposits were required or recorded in the Condensed Consolidated Balance Sheets for either period.

When the net fair value of any of the Company's OTC derivative instrument contracts represents an asset to the Company that is in excess of the agreed-upon dollar threshold for the counterparty's then-applicable credit rating, the Company has the right to require the counterparty to remit funds as a margin deposit in an amount equal to the portion of the derivative asset that is in excess of the dollar threshold amount.

The Company records these deposits as a current liability in the Condensed Consolidated Balance Sheets.

As of both March 31, 2023 and December 31, 2022, there were no such deposits recorded in the Condensed Consolidated Balance Sheets.

As of both June 30, 2023 and December 31, 2022, there were no such deposits recorded in the Condensed Consolidated Balance Sheets.

When the Company enters into exchange traded natural gas contracts, exchanges may require the Company to remit funds to the corresponding broker as good-faith deposits to guard against the risks associated with changing market conditions.

5 unchanged sentences

The margin requirements are subject to change at the exchanges' discretion.

As of March 31, 2023 and December 31, 2022, the Company recorded $ 181.8 million and $ 100.6 million, respectively, of such deposits as current assets in the Condensed Consolidated Balance Sheets.

As of June 30, 2023 and December 31, 2022, the Company recorded $ 27.4 million and $ 100.6 million, respectively, of such deposits as current assets in the Condensed Consolidated Balance Sheets.

EQT CORPORATION AND SUBSIDIARIES

4 unchanged sentences

master netting agreements Margin requirements with counterparties Net derivative instruments

March 31, 2023

June 30, 2023

Asset derivative instruments, at fair value $ 683,612 $ ( 360,541 ) $ — $ 323,071

3 unchanged sentences

Liability derivative instruments, at fair value 1,393,487 ( 756,495 ) ( 100,623 ) 536,369

Henry Hub Cash Bonus.

The Consolidated GGA (defined in Note 8) executed in connection with the Equitrans Share Exchange (defined in Note 8) provides for cash bonus payments (the Henry Hub Cash Bonus) payable by the Company during the period beginning on the first day of the quarter in which the Mountain Valley Pipeline is placed in service and ending on the earlier of 36 months thereafter or December 31, 2024.

Such payments are conditioned upon the quarterly average of the NYMEX Henry Hub natural gas settlement price exceeding certain price thresholds.

As of December 31, 2022, the Company reduced the derivative liability related to the Henry Hub Cash Bonus to zero given the uncertainties surrounding the in-service date of the Mountain Valley Pipeline and the Company's then-held belief that achieving an in-service date of the Mountain Valley Pipeline prior to December 31, 2024 was not probable.

On June 3, 2023, President Biden signed legislation that raises the United States' debt limit, ratifies and approves all permits and authorizations necessary for the construction and initial operation of the Mountain Valley Pipeline and directs the applicable federal officials and agencies to maintain such authorizations.

Further, the legislation requires the Secretary of the Army to issue all permits or verifications necessary to complete project construction and allow for the Mountain Valley Pipeline's operation and maintenance.

Given the impact of this legislation, the Company reevaluated its probability-weighted assessment of the achievement of an in-service date of the Mountain Valley Pipeline prior to December 31, 2024 and concluded that, as of June 30, 2023, based on the facts and circumstances that existed as of that date, the derivative liability related to the Henry Hub Cash Bonus had a fair value of approximately $ 62.1 million.

The fair value of the derivative liability related to the Henry Hub Cash Bonus is based on significant inputs that are interpolated from observable market data and, as such, is a Level 2 fair value measurement.

See Note 4 for a description of the fair value hierarchy.

Fair Value Measurements

4 unchanged sentences

The Company estimates nonperformance risk by analyzing publicly available market information, including a comparison of the yield on debt instruments with credit ratings similar to the Company's or counterparty's credit rating and the yield on a risk-free instrument.

EQT CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

The Company has categorized its assets and liabilities recorded at fair value into a three-level fair value hierarchy based on the priority of the inputs to the valuation technique.

5 unchanged sentences

The significant observable inputs used by the option pricing models include NYMEX forward curves, natural gas volatilities and LIBOR-based discount rates.

EQT CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

The table below summarizes assets and liabilities measured at fair value on a recurring basis.

4 unchanged sentences

(Level 2) Significant unobservable inputs

March 31, 2023

June 30, 2023

Asset derivative instruments, at fair value $ 683,612 $ 75,675 $ 607,937 $ —

4 unchanged sentences

The carrying values of cash equivalents, accounts receivable and accounts payable approximate fair value due to their short-term maturities.

The carrying value of any borrowings under the Company's credit facility and Term Loan Facility (defined in Note 6) approximates fair value as the interest rates are based on prevailing market rates.

The Company considered all of these fair values to be Level 1 fair value measurements.

The carrying value of any borrowings under the Company's credit facility and the Term Loan Facility (defined in Note 6) approximates fair value as their interest rates are based on prevailing market rates.

The Company considers these fair values to be Level 1 fair value measurements.

The Company has an investment in a fund (the Investment Fund) that invests in companies developing technology and operating solutions for exploration and production companies.

The investment is valued using, as a practical expedient, the net asset value provided in the financial statements received from fund managers.

The Company values the Investment Fund using, as a practical expedient, the net asset value provided in the financial statements received from fund managers.

The Company estimates the fair value of its senior notes using established fair value methodology.

Because not all of the Company's senior notes are actively traded, their fair value is a Level 2 fair value measurement.

As of March 31, 2023 and December 31, 2022, the Company's senior notes had a fair value of approximately $ 5.8 billion and $ 6.1 billion, respectively, and a carrying value of approximately $ 5.4 billion and $ 5.6 billion, respectively, inclusive of any current portion.

As of June 30, 2023 and December 31, 2022, the Company's senior notes had a fair value of approximately $ 5.0 billion and $ 6.1 billion, respectively, and a carrying value of approximately $ 4.6 billion and $ 5.6 billion, respectively, inclusive of any current portion.

The fair value of the Company's note payable to EQM Midstream Partners, LP (EQM) is estimated using an income approach model with a market-based discount rate and is a Level 3 fair value measurement.

As of March 31, 2023 and December 31, 2022, the Company's note payable to EQM had a fair value of approximately $ 96 million and $ 96 million, respectively, and a carrying value of approximately $ 93 million and $ 94 million, respectively, inclusive of any current portion.

As of June 30, 2023 and December 31, 2022, the Company's note payable to EQM had a fair value of approximately $ 94 million and $ 96 million, respectively, and a carrying value of approximately $ 91 million and $ 94 million, respectively, inclusive of any current portion.

See Note 6 for further discussion of the Company's debt.

1 unchanged sentence

There were no transfers between Levels 1, 2 and 3 during the periods presented.

See Note 3 for a discussion of the fair value measurement of the Henry Hub Cash Bonus.

See Note 8 for a discussion of the fair value measurement of the contract asset.

See Note 1 to the Consolidated Financial Statements in the Company's Annual Report on Form 10-K for the year ended December 31, 2022 for a discussion of the fair value measurement of the Company's oil and gas properties and other long-lived assets, including impairment and expiration of leases.

For the three months ended March 31, 2023 and 2022, the Company calculated the provision for income taxes for interim periods by applying an estimate of the annual effective tax rate for the full fiscal year to "ordinary" income or loss (pre-tax income or loss excluding unusual or infrequently occurring items) for the period.

There were no material changes to the Company's methodology for determining unrecognized tax benefits during the three months ended March 31, 2023.

For the three months ended March 31, 2023 and 2022, the Company recorded income tax expense (benefit) at an effective tax rate of 22.6 % and 23.5 %, respectively.

The Company's effective tax rate was higher compared to the U.S.

federal statutory rate due primarily to state taxes, including valuation allowances limiting certain state tax benefits.

EQT CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the six months ended June 30, 2023 and 2022, the Company calculated the provision for income taxes for interim periods by applying an estimate of the annual effective tax rate for the full fiscal year to "ordinary" income or loss (pre-tax income or loss excluding unusual or infrequently occurring items) for the period.

There were no material changes to the Company's methodology for determining unrecognized tax benefits during the six months ended June 30, 2023.

For the six months ended June 30, 2023 and 2022, the Company recorded income tax expense (benefit) at an effective tax rate of 23.0 % and 20.2 %, respectively.

The Company's effective tax rate for the six months ended June 30, 2023 was higher compared to the U.S.

federal statutory rate due primarily to state taxes, including valuation allowances limiting certain state tax benefits.

The Company's effective tax rate for the six months ended June 30, 2022 was lower compared to the U.S.

federal statutory rate due primarily to nondeductible repurchase premiums on the Convertible Notes (defined in Note 6), partly offset by state taxes, including valuation allowances limiting certain state tax benefits.

On August 16, 2022, President Biden signed into law the Inflation Reduction Act of 2022 (the IRA), which is effective for tax years beginning after December 31, 2022.

6 unchanged sentences

The exact timing and amount of the valuation allowance release would be subject to change based on the level of profitability that the Company can achieve.

EQT CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

The table below summarizes the Company's outstanding debt.

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

Principal Value Carrying Value (a) Principal Value Carrying Value (a)

26 unchanged sentences

Long-term debt $ 4,292,802 $ 4,257,636 $ 5,295,882 $ 5,256,333

(a) For the Company's credit facility and note payable to EQM, the principal value represents the carrying value.

(a) For the note payable to EQM, the principal value represents the carrying value.

For all other debt, the principal value less the unamortized debt issuance costs and debt discounts represents the carrying value.

1 unchanged sentence

Interest rates on the Company's other outstanding senior notes do not fluctuate.

(c) As of March 31, 2023, the current portion of debt includes the 1.75 % convertible notes and a portion of the note payable to EQM.

As of December 31, 2022, the current portion of debt includes the 7.42 % series B notes, the 1.75 % convertible notes and a portion of the note payable to EQM.

EQT CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(c) As of June 30, 2023, the current portion of debt included the 1.75 % convertible notes and a portion of the note payable to EQM.

As of December 31, 2022, the current portion of debt included the 7.42 % series B notes, the 1.75 % convertible notes and a portion of the note payable to EQM.

Debt Repayments .

The Company redeemed or repurchased the following debt during the three months ended March 31, 2023.

Debt Tranche Principal Premiums/(Discounts) Accrued but Unpaid Interest Total Cost

The Company redeemed or repurchased the following debt during the six months ended June 30, 2023.

Debt Tranche Principal Premiums/(Discounts) (a) Accrued but Unpaid Interest Total Cost

6.125 % notes due February 1, 2025

$ 309,946 $ 1,832 $ 6,801 $ 318,579

5.678 % notes due October 1, 2025

500,000 — 6,940 506,940

3.125 % notes due May 15, 2026

9 unchanged sentences

Total $ 1,000,000 $ ( 6,328 ) $ 16,435 $ 1,010,107

(a) Includes third-party costs and fees paid to dealer managers and brokers.

Credit Facility .

The Company has a $ 2.5 billion credit facility that matures in June 2027.

As of both March 31, 2023 and December 31, 2022, the Company had approximately $ 25 million of letters of credit outstanding under its credit facility.

During the three months ended March 31, 2023, there were no borrowings under the Company's credit facility.

During the three months ended March 31, 2022, under the Company's credit facility, the maximum amount of outstanding borrowings was $ 615 million, the average daily balance was approximately $ 306 million and interest was incurred at a weighted average annual interest rate of 2.0 %.

EQT CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

As of both June 30, 2023 and December 31, 2022, the Company had approximately $ 25 million of letters of credit outstanding under its credit facility.

During the three and six months ended June 30, 2023, there were no borrowings under the Company's credit facility.

During the three and six months ended June 30, 2022, under the Company's credit facility, the maximum amount of outstanding borrowings was $ 1,300 million for both periods, the average daily balance was approximately $ 844 million and $ 576 million, respectively, and interest was incurred at a weighted average annual interest rate of 2.3 % and 2.2 %, respectively.

Term Loan Facility .

The Company has an unsecured term loan facility (the Term Loan Facility) with aggregate lender commitments thereunder in the principal amount of $ 1.25 billion to partially finance the pending Tug Hill and XcL Midstream Acquisition as defined and described in Note 6 to the Consolidated Financial Statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2022.

As of March 31, 2023 and December 31, 2022, all commitments under the Term Loan Facility remained undrawn.

On April 25, 2023, the Company extended the commitments under the Term Loan Facility to December 29, 2023 to better align with the Tug Hill and XcL Midstream Acquisition purchase agreement.

The Company has an unsecured term loan facility (the Term Loan Facility) with aggregate lender commitments thereunder in the principal amount of $ 1.25 billion to partly finance the pending Tug Hill and XcL Midstream Acquisition (defined and discussed in Note 6 to the Consolidated Financial Statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2022).

As of June 30, 2023 and December 31, 2022, all commitments under the Term Loan Facility remained undrawn.

On April 25, 2023, the Company extended the commitments under the Term Loan Facility to December 29, 2023.

Prior to such extension, any unfunded commitments under the Term Loan Facility were scheduled to expire on June 30, 2023.

5.700 % Notes Consent Solicitation and Indenture Amendment.

On May 10, 2023, following the receipt of the requisite consents of holders of a majority of the aggregate principal amount of the Company's 5.700 % senior notes, which were obtained through a solicitation of consents that the Company commenced on May 3, 2023, the Company amended the indenture governing the Company's outstanding 5.700 % senior notes to extend the Outside Date (defined below) for the special mandatory redemption provision from June 30, 2023 to December 29, 2023.

In October 2022, the Company issued its 5.700 % senior notes to partly finance the pending Tug Hill and XcL Midstream Acquisition.

Under the indenture governing the Company's 5.700 % senior notes, the Company is required to redeem the outstanding 5.700 % senior notes at a redemption price equal to 101 % of the principal amount of the 5.700 % senior notes plus accrued and unpaid interest, if any, to, but excluding, the date of such mandatory redemption if (i) the Tug Hill and XcL Midstream Acquisition is not consummated on or before June 30, 2023 (the Outside Date) or (ii) the Company notifies the trustee of the 5.700 % senior notes that it will not pursue the consummation of the Tug Hill and XcL Midstream Acquisition.

Under the terms set forth in the consent solicitation statement, on May 11, 2023, the Company paid to holders of outstanding 5.700 % senior notes who delivered valid consents a consent fee of $ 3.6 million in the aggregate.

In addition, pursuant to the terms set forth in the consent solicitation statement, on July 5, 2023, the Company paid to such holders an additional consent fee of $ 1.8 million in the aggregate.

Convertible Notes .

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Notes to the Condensed Consolidated Financial Statements (Unaudited)

The Company may not redeem the Convertible Notes prior to May 5, 2023.

The Company was not permitted to redeem the Convertible Notes prior to May 5, 2023.

On or after May 5, 2023 and prior to February 1, 2026, the Company may redeem for cash all or any portion of the Convertible Notes at its option at a redemption price equal to 100 % of the principal amount of the Convertible Notes to be redeemed plus accrued and unpaid interest up to the redemption date as long as the last reported price per share of EQT Corporation common stock has been at least 130 % of the conversion price in effect for at least 20 trading days (consecutive or otherwise) during any 30 -consecutive-trading-day period ending on the trading day immediately preceding the date on which the Company delivers notice of redemption.

A sinking fund is not provided for the Convertible Notes.

As a result of the cash dividend the Company paid on its common stock in the first quarter of 2023, effective February 17, 2023, the conversion rate for the Convertible Notes was adjusted to 68.0740 shares of EQT Corporation common stock per $1,000 principal amount of the Convertible Notes.

Future dividend payments by the Company will result in further adjustments to the conversion rate.

The conversion rate is subject to adjustment under certain other circumstances.

As a result of the cash dividends EQT Corporation paid on its common stock during the first half of 2023, the conversion rate for the Convertible Notes was adjusted as noted in the following table.

Future dividend payments by EQT Corporation will result in further adjustments to the conversion rate.

Dividend Paid Effective Date of Adjustment to Conversion Rate Conversion Shares of EQT Corporation Common Stock per $1,000 Principal Amount

Q1 2023 February 17, 2023 68.0740

Q2 2023 May 9, 2023 68.3917

The conversion rate is also subject to adjustment under certain other circumstances.

In addition, following certain corporate events that occur prior to May 1, 2026 or if the Company delivers notice of redemption, the Company will, in certain circumstances, increase the conversion rate for a holder who elects to convert its Convertible Notes in connection with such corporate event or notice of redemption.

The Sale Price Condition for conversion of the Convertible Notes was satisfied as of March 31, 2023 and December 31, 2022, and, accordingly, holders of the Convertible Notes are permitted to convert any of their Convertible Notes at their option at any time during the second quarter of 2023 and the first quarter of 2023, respectively, subject to the terms and conditions set forth in the Convertible Notes indenture.

Therefore, as of March 31, 2023 and December 31, 2022, the net carrying value of the Convertible Notes was included in current portion of debt in the Condensed Consolidated Balance Sheets.

The following table summarizes the settlement of Convertible Notes conversion right exercises for the three months ended March 31, 2023.

The Sale Price Condition for conversion of the Convertible Notes was satisfied as of June 30, 2023, and, accordingly, the Convertible Notes indenture permits holders of the Convertible Notes to convert any of their Convertible Notes at their option at any time during the third quarter of 2023, subject to the terms and conditions set forth in the Convertible Notes indenture.

In addition, the Sales Price Condition for conversion of the Convertible Notes was satisfied as of December 31, 2022, and, accordingly, the Convertible Notes indenture permitted holders of the Convertible Notes to convert any of their Convertible Notes at their option at any time during the first quarter of 2023, subject to the terms and conditions set forth in the Convertible Notes indenture.

Therefore, as of June 30, 2023 and December 31, 2022, the net carrying value of the Convertible Notes was included in current portion of debt in the Condensed Consolidated Balance Sheets.

The following table summarizes settlements of Convertible Notes conversion right exercises for the six months ended June 30, 2023.

The Company elected to settle all such conversions by issuing to the converting holders shares of EQT Corporation common stock.

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March 2023 6 408 31.46

April 2023 58 3,948 32.01

June 2023 4 272 39.06

Upon conversion of the remaining outstanding Convertible Notes, the Company may satisfy its conversion obligation by paying and/or delivering at the Company's election, in the manner and subject to the terms and conditions provided in the Convertible Notes indenture, cash, shares of EQT Corporation common stock or a combination thereof.

The Company intends to use a combined settlement approach to satisfy its obligation by paying or delivering to holders of the Convertible Notes cash equal to the principal amount of the obligation and EQT Corporation common stock for amounts that exceed the principal amount of the obligation.

In connection with the Convertible Notes offering, the Company entered into privately negotiated capped call transactions (the Capped Call Transactions), the purpose of which is to reduce the potential dilution to EQT Corporation common stock upon conversion of the Convertible Notes and/or offset any cash payments the Company is required to make in excess of the principal amount of such obligation, with such reduction and offset subject to a cap.

The Capped Call Transactions have an initial strike price of $ 15.00 per share of EQT Corporation common stock and an initial capped price of $ 18.75 per share of EQT Corporation common stock, each of which are subject to certain customary adjustments, including adjustments as a result of the Company paying a dividend on its common stock.

Based on the closing stock price of EQT Corporation common stock of $ 31.91 on March 31, 2023 and excluding the impact of the Capped Call Transactions, the if-converted value of the Convertible Notes exceeded the principal amount by $ 486 million.

EQT CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

Based on the closing stock price of EQT Corporation common stock of $ 41.13 on June 30, 2023 and excluding the impact of the Capped Call Transactions, the if-converted value of the Convertible Notes exceeded the principal amount by $ 752 million.

The table below summarizes the net carrying value and fair value of the Convertible Notes.

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

Principal $ 414,749 $ 414,832

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Three Months Ended

June 30, Six Months Ended

2023 2022 2023 2022

Contractual interest expense $ 1,815 $ 2,183 $ 3,629 $ 4,370

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Total Convertible Notes interest expense $ 2,398 $ 2,870 $ 4,793 $ 5,741

Earnings (Loss) Per Share

The following table shows the computation for basic and diluted earnings (loss) per share.

EQT CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(Loss) Income Per Share

The following table shows the computation for basic and diluted (loss) income per share.

Three Months Ended

June 30, Six Months Ended

2023 2022 2023 2022

(Thousands, except per share amounts)

Net income (loss) attributable to EQT Corporation – basic earnings available to shareholders $ 1,218,548 $ ( 1,516,048 )

Net (loss) income attributable to EQT Corporation – Basic (loss) income available to shareholders $ ( 66,626 ) $ 891,361 $ 1,151,922 $ ( 624,687 )

Interest expense on Convertible Notes, net of tax (a) — 2,279 3,691 —

Diluted earnings (loss) available to shareholders $ 1,220,402 $ ( 1,516,048 )

Diluted (loss) income available to shareholders $ ( 66,626 ) $ 893,640 $ 1,155,613 $ ( 624,687 )

Weighted average common stock outstanding – Basic 361,982 369,866 361,721 372,023

Options, restricted stock, performance awards and stock appreciation rights (a) — 4,132 3,455 —

Convertible debt (a) 28,195 —

Convertible Notes (a) — 33,305 28,259 —

Weighted average common stock outstanding – Diluted 361,982 407,303 393,435 372,023

Income (loss) per share of common stock attributable to EQT Corporation:

(Loss) income per share of common stock attributable to EQT Corporation:

Basic $ ( 0.18 ) $ 2.41 $ 3.18 $ ( 1.68 )

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(a) In periods when the Company reports a net loss, all options, restricted stock, performance awards and stock appreciation rights are excluded from the calculation of diluted weighted average shares outstanding because of their anti-dilutive effect on loss per share.

As a result, for the three months ended March 31, 2022, all such securities of 7.3 million were excluded from potentially dilutive securities because of their anti-dilutive effect on loss per share.

EQT CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

In addition, the Company uses the if-converted method to calculate the impact of the Convertible Notes on diluted earnings (loss) per share.

For the three months ended March 31, 2022, such if-converted securities of approximately 33.5 million and the related add back of interest expense on the Convertible Notes, net of tax, were excluded from potentially dilutive securities because of their anti-dilutive effect on loss per share.

As a result, for the three months ended June 30, 2023 and six months ended June 30, 2022, all such securities of 4.7 million and 6.9 million, respectively, were excluded from potentially dilutive securities because of their anti-dilutive effect on loss per share.

In addition, the Company uses the if-converted method to calculate the impact of the Convertible Notes on diluted (loss) income per share.

For the three months ended June 30, 2023 and six months ended June 30, 2022, such if-converted securities of approximately 28.3 million and 33.4 million, respectively, as well as the respective related add back of interest expense on the Convertible Notes, net of tax, were excluded from potentially dilutive securities because of their anti-dilutive effect on loss per share.

Impairment of Contract Asset

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During the third quarter of 2022, the Company elected to exercise the Cash Payment Option, and, in the fourth quarter of 2022, the Company received the cash proceeds from the Cash Payment Option.

EQT CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

During 2022, the Company identified indicators that the carrying value of the contract asset may not be fully recoverable, including increased uncertainty of the estimated timing of completion of the Mountain Valley Pipeline due to court rulings and public statements from Equitrans Midstream with respect to its completion.

As a result of the Company's impairment evaluation, the Company recognized impairment during the first quarter of 2022 of $ 184.9 million in the Statement of Condensed Consolidated Operations.

During the fourth quarter of 2022, the Company recognized additional impairment of $ 29.3 million in the Statement of Condensed Consolidated Operations.

As of December 31, 2022, the previously recognized impairment plus the election of the Cash Payment Option reduced the carrying value of the contract asset to zero .

As a result of the Company's impairment evaluation, the Company recognized impairment of the contract asset during the first quarter of 2022 of $ 184.9 million in the Statement of Condensed Consolidated Operations.

During the fourth quarter of 2022, the Company recognized additional impairment of the contract asset of $ 29.3 million in the Statement of Condensed Consolidated Operations.

As of December 31, 2022, the previously recognized impairments plus the election of the Cash Payment Option reduced the carrying value of the contract asset to zero .

The fair value of the contract asset was based on significant inputs that are not observable in the market and, as such, is a Level 3 fair value measurement.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements